Two-and-a-half years after its inception, relatively few borrowers have managed to qualify for permanent mortgage modifications
Back when the Obama administration unveiled its Making Home Affordable Program, designed to modify mortgages and prevent foreclosures, optimism was high. The Treasury initially asserted that the program would help 3 to 4 million struggling homeowners to avoid foreclosure. At this point, it will have trouble hitting one million successful permanent modifications. Let's look at its progress, step-by-step throughout the modification process.
Here's a chart that acts as a sort of progress report on the HAMP program (through September 2011):
The chart begins with the entire pool of Americans with mortgages who might have benefited from the program. This includes:
- 2.2 million homeowners who are 60+ days delinquent as of June 2011 (based on Mortgage Bankers Association data)
- 5.6 million homes lost through foreclosure, which have been auctioned or repossessed by banks since April 2009 (based on RealtyTrac data)
- 723,000 permanent modifications through HAMP (per the Treasury)
That totals to about 8.5 million.*
The rest of the numbers above are provided by the Treasury. First, it cuts the number to those that satisfy the specific eligibility requirements of HAMP. This takes quite a few of those struggling homeowners out of the equation. Treasury says just over 2.5 million homeowners are accounted for here.
Of that 2.5 million, about 1.9 million trial modifications have been offered. And of those offered, 1.7 million trials actually began.
But lots of program participants get weeded out on the way to going permanent. Just 857,000 were granted permanent modifications. Of those homeowners, a fair number re-defaulted. That leaves about 723,000 who either continue to pay their permanently modified mortgage or have since paid off their home.
So of the 8.5 million struggling homeowners in the U.S. who might have benefited from a government foreclosure prevention program, we've seen 723,000 successfully take advantage of the HAMP. That's a success rate of roughly 8.5%.
* Note: This is an admittedly conservative estimate. I don't include borrowers that would have escaped foreclosure through private mortgage modification programs. I also don't include borrowers who narrowly avoided foreclosure but still lost their homes through actions like short sales. Good estimates of these numbers are hard to find.
Image Credit: Reuters/Carlos Barria